The brightening state budget picture could this year give the Payson Unified School District a break from financial trauma, but probably won’t allow the district to regain lost ground, Superintendent Casey O’Brien told the school board this week.
Gov. Jan Brewer’s proposed budget projects a $672 million surplus, in contrast to the multi-billion-dollar deficits of the past two years.
“Arizona is certainly in a lot better position than a lot of states, but I do not think that we will be restored to the levels before the recession,” said O’Brien.
The district has closed a school, increased class sizes, nearly stopped buying supplies and new textbooks, and laid off teachers and other staff in the past three years.
“My job is to find solutions to get us through these very, very trying times,” said O’Brien, who recently announced he’ll retire at the end of this school year. “Fortunately, our community stepped up and passed an override, otherwise I have no idea where we’d be.”
The district lost 61 students this year, which reduces state funding by $233,000 from its $13.8 million operations and maintenance budget.
“If we’d gained 61 students instead of losing those students, that would have had a half million dollar impact on the budget,” O’Brien told the board at its Monday meeting.
“If a district is growing, the problems are so much easier.”
The district has lost 251 students since the onset of the recession, an 11 percent decline. O’Brien said the decline reflects young families leaving the community for lack of jobs, especially in the once booming construction and tourism sectors.
“Obviously, we know the pain we’ve experienced. But the enrollment decline reflects only a portion of the cuts we’ve experienced.”
O’Brien said Gov. Brewer has proposed a nearly $9 billion state budget that includes some additional funding for K-12 schools.
The budget would include $100 million for “soft capital,” mostly supplies and textbooks. The state provided no money for supplies this year, which had a big impact on schools here.
“Schools cannot continue to operate without money for supplies,” said O’Brien.
If the Legislature approves $100 million for school supplies, that would still be about half of what spending formulas would require.
Overall, the Legislature, due to state budget deficits, has cut funding for K-12 schools by 24 percent in the past three years — nearly $900 per student.
The governor’s proposed budget includes $50 million in new money to help ensure second- and third-graders can read adequately.
New proposed state reforms will require districts to hold back any third-graders who can’t read fluently, which could result in many of the district’s third-graders getting held back in two years.
The extra money would help districts set up extra classes, tutoring and programs for struggling students. That money might also perhaps restore all-day kindergarten for some students, said O’Brien.
“We don’t know the details yet,” said O’Brien of the guidelines to implement the “Move On When Ready” reforms.
The governor’s proposed budget also includes a controversial provision to cut back on state spending on school construction.
Several years ago, lawsuits successfully attacked the constitutionality of the state’s property-tax-dependent school financing system. That system resulted in huge per-student-spending gaps between property tax rich districts like Scottsdale and property tax poor districts like Payson and Globe.
The state eventually assumed primary responsibility for financing public education, with a mix of local property taxes and general fund money. The state also assumed responsibility for funding school construction.
The state virtually eliminated funding for new schools in the past two years, with the exception of emergency projects like replacing the roof of Payson High School’s old gym. Now, Brewer wants to adopt a rule that would ban new construction for a school if there’s any excess classroom space at any other school within 10 miles.
O’Brien said some lawmakers have already criticized Brewer’s proposed budget and have suggested the projected surplus go instead into a reserve fund.
Many worry that the budget will slip back into deficit in two years when a $1 billion state sales tax surcharge expires.
The superintendent said he doesn’t yet know whether the increases proposed by the governor will outweigh the $233,000 cut in the district’s funding as a result of the enrollment decline. In addition, the district seems likely to lose several hundred thousand dollars in funding from the federal government. In the past several years as part of its stimulus spending package, the federal government has made extra payments to rural districts with so much federal land in the district that it reduces property tax revenue.
O’Brien said he also doesn’t know whether the district’s employee health plan costs will rise significantly this year.
Two years ago, the district’s health plan provider warned it would impose a 76 percent premium increase. The district then switched insurance carriers and wound up last year with almost no increase.
O’Brien said the district will likely face another tight budget, but not the debilitating cuts of recent years.
“It’s a whole different ball game. Most districts are faced with very tough financial decisions. You have to just keep your heads,” concluded O’Brien.